QUESTION $3$ The cost of the new equipment is R$8,5$ million, and the company qualifies for a depreciation deduction of $40\%$ of the cost in the first year and $20\%$ in each of the subsequent three years. The equipment is also expected to reduce the cost of producing an existing product line by R$180000$ per annum before tax for another four years when the life of this product line is expected to end. The expected residual value of the equipment is R$2,1$ million in four years$$ time. The new line of products will result in a selling price of R$85$ per unit and a variable cost of R$38$ per unit. The product line is expected to result in a constant demand of $70,000$ units per annum for four years. The current tax value of the present equipment is R$300000,$ and its current market value is R$410000.$ The equipment is expected to have a residual value of zero in four years$$ time. The investment in net working capital will amount to R$475000.12$ PROJECT B Year Project A Cf $($R$)025000001800000210000003100000042000000520000006930000$ The company tax rate is currently $28\%.3\mathrm{.}1$ Calculate the proceeds from the sale of current equipment $(4$ Marks$)3\mathrm{.}2$ Calculate the initial investment $(3$ marks$)3\mathrm{.}3$ Calculate the operating cash flow and terminal cash flow $(13$ marks$)[$TOTAL $50]$